We7 morphs from jukebox into a radio station

Is there anyone in the world who needs to know the difference between "on demand" and "non-interactive" music? We use the words "jukebox" and "radio" as shorthand – but really, no one should care.

But in the archaic world of music licensing, the two command different royalty rates – and the higher on-demand rates are squeezing the suppliers towards radio.

The Peter Gabriel-backed music service We7, one of the first ad-supported music services, this week completed the shift from jukebox to personalised radio station – having previously been a shop. The company says higher supply costs are a factor: the PRS charges 0.065p per play for an internet radio service, versus 0.085p per play for an on-demand service.

We7 announced the shift last November, having lost £3.68m in 2009, with revenue of just £361,081.

This week it completed the transformation – although members are still entitled to 50 on-demand tracks a month. The pay side offering ad-free and mobile access continues.

"We believe that a radio-with-request service is easier for more people to get access to more music without effort, you just sit back and just enjoy the music," CEO Steve Purdham told us. "Rights-holders are imposing more restrictions upon free music services in an attempt to protect the value of music – but in fairness, only 2 per cent of our users request more than 50 tracks a month."

Pandora's phenomenal growth in the US has helped make the move look like a positive one. The US company successfully went public this year, and while it is still in the red, looks healthier financially.

It makes you wonder who, if anyone, can capitalise on Spotify's self-inflicted wounds this week. ®